CA - Diversify Your Portfolio And Earn +9% Yield

2024-07-02 07:35:00 ET

Summary

• Diversification is an essential method of risk management.
• The Income Method guidelines suggest owning at least 42 stocks with allocations of 2-3%.
• We discuss why we use these numbers to help you determine if they are right for you.

Co-authored with Beyond Saving.

Today, I want to discuss diversification and allocations. Questions about allocations and their management are among the most common inquiries I receive, both within my private Investing Group and in public forums. It is important to be aware of this because diversification is a key component of risk management.

With The Income Method , we have developed a few guidelines to help investors have an idea of what they should aim for. These include the Rule of 42 and the guideline of keeping position sizes at a maximum of 2-3% of your portfolio (up to 4% or 5% for some funds)....

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